SCHOOL DISTRICT OF FLORENCE TOWNSHIP. FLORENCE TOWNSHIP SCHOOL DISTRICT Florence, New Jersey County of Burlington

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1 SCHOOL DISTRICT OF FLORENCE TOWNSHIP FLORENCE TOWNSHIP SCHOOL DISTRICT Florence, New Jersey County of Burlington COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016

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3 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE FLORENCE TOWNSHIP SCHOOL DISTRICT FLORENCE, NEW JERSEY FOR THE FISCAL YEAR ENDED JUNE 30, 2016

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5 OUTLINE OF CAFR PAGE INTRODUCTORY SECTION Letter of Transmittal 1 Organizational Chart 5 Roster of Officials 7 Consultants and Advisors 8 FINANCIAL SECTION Independent Auditor's Report 9 Management's Discussion & Analysis 15 BASIC FINANCIAL STATEMENTS REQUIRED SUPPLEMENTARY INFORMATION - PART I A. Government-Wide Financial Statements: A-1 Statement of Net Position 29 A-2 Statement of Activities 30 B. Fund Financial Statements: Governmental Funds: B-1 Balance Sheet 37 B-2 Statement of Revenues, Expenditures & Changes in Fund Balance 38 B-3 Reconciliation of the Statement of Revenues, Expenditures & Changes in Fund 40 Balance of Governmental Funds to the Statement of Activities Proprietary Funds: B-4 Statement of Net Position 43 B-5 Statement of Revenues, Expenditures & Changes in Fund Net Position 44 B-6 Statement of Cash Flows 45 Fiduciary Funds: B-7 Statement of Fiduciary Net Position 49 B-8 Statement of Changes in Fiduciary Net Position 50 Notes to Financial Statements 51 REQUIRED SUPPLEMENTARY INFORMATION - PART II C. Budgetary Comparison Schedules: C-1 Budgetary Comparison Schedule - General Fund 89 C-1a Combining Schedule of Revenue, Expenditures & Changes in Fund Balance - Budget & Actual N/A C-2 Budgetary Comparison Schedule - Special Revenue Fund 99 Notes to the Required Supplementary Information: C-3 Budget-to-GAAP Reconciliation 103 (continued)

6 OUTLINE OF CAFR (continued): PAGE REQUIRED SUPPLEMENTARY INFORMATION - PART II L. Schedules Related to Accounting and Reporting for Pensions (GASB 68) L-1 Schedule of the District s Proportionate Share of the Net Pension Liability PERS 109 L-2 Schedule of the District Contributions PERS 110 L-3 State's Proportionate Share of the Net Pension Liability Associated With the District's TPAF 111 Notes to the Required Supplementary Information - Part III 113 D. School Based Budget Schedules Fund (if applicable): D-1 Combining Balance Sheet N/A D-2 Blended Resource Fund - Schedule of Expenditures Allocated by Resource Type - Actual N/A D-3 Blended Resource Fund - Schedule of Blended Expenditures - Budget & Actual N/A E. Special Revenue Fund: E-1 Combining Schedule of Revenues & Expenditures - Special Revenue Fund - Budgetary Basis 121 E-2 Preschool Education Aid Schedule(s) of Expenditures - Budgetary Basis N/A F. Capital Projects Fund: F-1 Summary Statement of Project Expenditures N/A F-2 Summary Schedule of Revenues, Expenditures and Changes in Fund Balance - Budgetary Basis N/A G. Proprietary Funds: Enterprise Funds: G-1 Combining Statement of Net Position 129 G-2 Combining Statement of Revenues, Expenses & Changes in Fund Net Position 130 G-3 Combining Statement of Cash Flows 131 Internal Service Funds: G-4 Combining Statement of Net Position N/A G-5 Combining Statement of Revenues, Expenses & Changes in Fund Net Position N/A G-6 Combining Statement of Cash Flows N/A (continued)

7 OUTLINE OF CAFR (continued): PAGE H. Fiduciary Funds: H-1 Combining Statement of Fiduciary Net Position 135 H-2 Combining Statement of Changes in Fiduciary Net Position 136 H-3 Student Activity Agency Fund Schedule of Receipts & Disbursements 137 H-4 Payroll Agency Fund Schedule of Receipts & Disbursements 137 I. Long-Term Debt: I-1 Schedule of Serial Bonds 141 I-2 Schedule of Obligations Under Capital Leases 142 I-3 Debt Service Fund Budgetary Comparison Schedule 143 I-4 Schedule of Compensated Absences 144 STATISTICAL SECTION (unaudited) Financial Trends: J-1 Net Position by Component 149 J-2 Changes in Net Position 150 J-3 Fund Balances - Governmental Funds 152 J-4 Changes in Fund Balance - Governmental Funds 153 J-5 Other Local Revenue by Source - General Fund 155 Revenue Capacity: J-6 Assessed Value & Estimated Actual Value of Taxable Property 159 J-7 Direct & Overlapping Property Tax Rates 160 J-8 Principal Property Taxpayers 161 J-9 Property Tax Levies & Collections 162 Debt Capacity: J-10 Ratios of Outstanding Debt by Type 165 J-11 Ratios of General Bonded Debt Outstanding 166 J-12 Direct & Overlapping Governmental Activities Debt 166 J-13 Legal Debt Margin Information 167 Demographic & Economic Information: J-14 Demographic & Economic Statistics 171 J-15 Principal Employers 172 Operating Information: J-16 Full-Time Equivalent District Employees by Function/Program 175 J-17 Operating Statistics 176 J-18 School Building Information 177 J-19 Schedule of Required Maintenance 178 J-20 Insurance Schedule 179 SINGLE AUDIT SECTION K-1 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 183 K-2 Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance as required by the Uniform Guidance and New Jersey OMB Circular K-3 Schedule of Expenditures of Federal Awards, Schedule A 189 K-4 Schedule of Expenditures of State Financial Assistance, Schedule B 190 K-5 Notes to Schedules of Awards and Financial Assistance 191 K-6 Schedule of Findings & Questioned Costs 193 K-7 Summary Schedule of Prior Audit Findings 196

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9 INTRODUCTORY SECTION

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11 FLORENCE TOWNSHIP SCHOOL SYSTEM 201 CEDAR STREET FLORENCE, NEW JERSEY DONNA AMBROSIUS MELISSA LIVENGOOD Superintendent of Schools Business Administrator/Board Secretary Ext Ext (Fax) (Fax) October 29, 2016 Honorable Emma A. Cartier, President and Members of the Board of Education Florence Township Public School District c/o Administration Building 201 Cedar Street Florence, New Jersey Dear Board Members, The Comprehensive Annual Financial Report of the Florence Township Public School District, for the fiscal year ended June 30, 2016 is hereby submitted. Responsibility for both the accuracy of the data and completeness and fairness of the presentation, including all disclosures, rests with the management of the Board of Education. To the best of our knowledge and belief, the data presented in this report is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the District. All disclosures necessary to enable the reader to gain an understanding of the District s financial activities have been included. The comprehensive annual financial report is presented in three sections: Introductory, Financial and Statistical. The Introductory section includes this transmittal letter, the District s organizational chart and a list of principal officials. The Financial section includes, under the new Governmental Accounting Standard Board Statement No. 34 as amended, the Report of Independent Statements, and the combining and individual fund statements. Required Supplementary Information includes Budgetary Comparison Schedules, Special Revenue Fund Schedules, as well as Capital Projects, Enterprise, Fiduciary Fund and Long Term Debt schedules. The Statistical section includes selected financial and demographic information. The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act and the related Uniform Guidance, and the State Treasury Circular Letter OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid Payments. Information related to the Single Audit requirement is included in a separate section as indicated in the table of contents. The financial statements include: A Management Discussion and Analysis (MD&A) section providing an analysis of the District s overall financial position and results of operations. Financial statements prepared using full accrual accounting for all of the District s activities, including infrastructure. A change in the fund financial statements to focus on the major funds. These and other changes are reflected in the accompanying financial statements and notes to financial statements. 1

12 1) REPORTING ENTITY AND ITS SERVICES: Florence Township Public School District is an independent agency reporting within the criteria adopted by the GASB as established by NCGA Statement No. 3. The District s basic financial statements include both government-wide (reporting the District as a whole) and fund financial statements (reporting the District s major funds). Both the government-wide and fund financial statements categorize primary activities as either governmental or business type. Food Service and Community Education and Recreation functions are classified as business-type activities. All funds of the district are included in this report. This Comprehensive Annual Financial Report for the year ended June 30, 2016 is presented in GASB 34 format. The Florence Township Board of Education and all its schools constitute the District s reporting entity. The District provides a full complement of educational opportunities from preschool disabled through twelfth grade. This includes six full day kindergarten classes. Additionally, the District provided for a full range of services to meet the needs of its disabled population in all grade levels including self-contained classes as well as Resource Center and Inclusion Programs. This District s school year enrollment of 1772 students as of June 30, 2016 represents a decrease of twenty-six students. 2) MAJOR INITIATIVES A dedicated local cable tv station provides the public with various events and information to increase community involvement. A staff committee comprised of teachers and administrators meet regularly to articulate those staff development activities that are mandated by the State and aligned to the goals established by the district for the given year. This has all been in compliance with the professional development committee. Special attention has been given to professional development in the area of inclusive education, mentor/mentee collaboration, enhanced technological awareness and continuing education in the area of technology, literacy across the curriculum, in alignment with the Common Core Curriculum Content Standards for appropriate assessment in the respective grade levels. The Coordinator of Technology has continued to upgrade the bandwidth and infrastructure. This has expanded to further technology throughout the school community. Curriculum development, research, feedback and articulation are through PLC and faculty meetings implemented in support of the necessary modifications, enhancements and extensions of curricular programs and course offerings. An emphasis in designated unit assessments was placed for this school year. 3) INTERNAL ACCOUNTING CONTROLS: Management of the District is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statement in conformity with General Accepted Accounting Principles (GAAP). The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance, recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal and state financial assistance, the District also is responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is also subject to periodic evaluation by the District management. As part of the District s single audit described earlier, tests are made to determine the adequacy of the internal structure, including that portion related to federal and state financial assistance programs, as well as to determine that the District has complied with applicable laws and regulations. 2

13 4) BUDGETARY CONTROLS: In addition to internal accounting controls, the District maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the voters of the municipality. Annual appropriated budgets are adopted for the general fund, the special revenue fund, and the debt service fund. Project-length budgets are approved for the capital improvements accounted for in the capital projects fund. The final budget amount as amended for the fiscal year is reflected in the financial section. An encumbrance accounting system is used to record outstanding purchase commitments on a line-item basis. Open encumbrances at year-end are either canceled or are included as reappropriation of fund balance in the subsequent year. Those amounts to be reappropriated are reported as reservations of fund balance at June 30, ) ACCOUNTING SYSTEM AND REPORTS: The District s accounting records reflect Generally Accepted Accounting Principles, are promulgated by the Governmental Accounting Standards Board (GASB). The accounting system of the district is organized on the basis of funds. These funds and account groups are explained in Notes to the Financial Statements, Note 1. 6) CASH MANAGEMENT: The investment policy of the District is guided in large part by state statute as detailed in Notes to the Financial Statements, Note 2. The District has adopted a cash management plan which requires it to deposit public funds depositories protected from loss under the provision of the Governmental Unit Deposit Protection Act ( GUDPA ). GUDPA was enacted in 1970 to protect Governmental Units from a loss of funds on deposit with a failed banking institution in New Jersey. The law requires governmental units to deposit public funds only in public depositories located in New Jersey, where the funds are secured in accordance with the Act. 7) RISK MANAGEMENT: The Board carried various forms of insurance, including but not limited to general liability, automobile liability and comprehensive/collision, hazard and theft insurance on property and contents, and fidelity bonds. 8) OTHER INFORMATION: State statutes require an annual audit by independent certified public accountants or registered municipality accountants. The accounting firm of Holman Frenia Allison, P.C., John J. Maley, Jr. C.P.A. was appointed by the Board of Education. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of the Single Audit Act and the related Uniform Guidance and NJ OMB Circular The Auditor s report on the general purpose financial statements and combining and individual fund statements and schedules are included in the financial section of this report. The Auditor s reports related specifically to the single audit are included in the Single Audit section of this report. 9) ACKNOWLEDGMENTS: We would like to express our appreciation to the members of the Florence Township Board of Education for their concern in providing fiscal accountability to the citizens and taxpayers of the school district and thereby contributing their full support to the development and maintenance of our financial operation. The preparation of this report could not have been accomplished without the efficient and dedicated services of our Board Office staff. Respectfully submitted: 3

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15 Superintendent of Schools Business Administrator Educational Facilities Manager Director Special Services Principal High School Principal Riverfront Principal Roebling Computer Coordinator Assistant Principal Assistant Principal (HS & RF Shared) Assistant Principal Business Office Operations & Maintenance Child Study Team Classroom Instruction Athletics Classroom Instruction Classroom Instruction IT Technician Operations & Maintenance Speech Services Library/ Media Services NCLB/ IDEA B Programs Library/ Media Services Library/ Media Services Transportation Department Mentor Services ESL Services Student Discipline ESL Services ESL Services District Security Non-Public Services G&T Program G&T Program G&T Program Attendance Services Co-Curricul ar Advisors Co-Curricula r Advisors Co-Curricul ar Advisors Extended Day Program Guidance Department Guidance Department Guidance Department Food Service Management Cafeteria Monitors Cafeteria Monitors Café/ Campus Monitors 5

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17 FLORENCE TOWNSHIP PUBLIC SCHOOL DISTRICT 201 Cedar Street Florence, New Jersey ROSTER OF OFFICIALS JUNE 30, 2016 MEMBERS OF THE BOARD OF EDUCATION TERM EXPIRES Emma Cartier, President 2016 Christine S. Skinner, Vice President 2018 Debbie Reyes 2017 Toby Popso 2016 Anne Lipsett 2018 Anthony Nutter 2016 Joseph Valdora 2018 Christopher Conti 2017 Laurie Tindall 2017 OTHER DISTRICT OFFICIALS Donna Ambrosius, Superintendent Melissa Livengood, Business Administrator Donald J. Cammus, Treasurer 7

18 FLORENCE TOWNSHIP PUBLIC SCHOOL DISTRICT 201 Cedar Street Florence, New Jersey Consultants and Advisors Board Auditor Holman Frenia Allison, P.C. 6 East Park Street, PO Box 614 Bordentown, New Jersey Board Solicitor Capehart & Scatchard, P.A. Laurel Corporate Center 8000 Midlantic Drive, Suite 300S Mt. Laurel, New Jersey Official Depositories Investors Bank 2150 Route 130 North Burlington, New Jersey

19 INDEPENDENT AUDITOR S REPORT Honorable President and Members of the Board of Education Florence Township School District County of Burlington Florence, New Jersey Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Florence Township School District, County of Burlington, State of New Jersey, as of and for the fiscal year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Governmental Auditing Standards, issued by the Comptroller General of the United States; and audit requirements as prescribed by the Office of School Finance, Department of Education, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 9

20 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Florence Township School District, County of Burlington, State of New Jersey, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, budgetary comparison and schedules relating to accounting and reporting for pensions information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Florence Township School District s basic financial statements. The introductory section, combining statements and related major fund supporting statements and schedules, and statistical section are presented for purposes of additional analysis, as required by the Division of Administration and Finance, Department of Education, State of New Jersey, and are not a required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance are presented for purposes of additional analysis as required by U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Audits of States, Local Governments, and Non-Profit Organizations and New Jersey OMB s Circular 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid respectively, and are also not a required part of the basic financial statements. The accompanying combining statements and the Schedule of Expenditures of Federal Awards and State Financial Assistance are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying 10

21 combining statements and Schedule of Expenditures of Federal Awards and State Financial Assistance are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical section listed in the table of contents have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 29, 2016 on our consideration of the Florence Township School District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Florence Township School District s internal control over financial reporting and compliance. Respectfully Submitted, HOLMAN FRENIA ALLISON, P.C. John J. Maley, Jr. Certified Public Accountant Public School Accountant, No. 454 October 29, 2016 Bordentown, New Jersey 11

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23 REQUIRED SUPPLEMENTARY INFORMATION - PART I Management's Discussion and Analysis 13

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25 FLORENCE TOWNSHIP SCHOOL SYSTEM 201 CEDAR STREET FLORENCE, NEW JERSEY DONNA AMBROSIUS MELISSA LIVENGOOD Superintendent of Schools Business Administrator/Board Secretary Ext Ext (Fax) (Fax) MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the Florence Township School District's annual financial report presents a discussion and analysis of the Florence Township School District's financial performance during the fiscal year that ended on June 30, Please read it in conjunction with the transmittal letter at the beginning of the report and with the Florence Township School District's financial statements. This report represents the first year that Florence Township School District's Comprehensive Annual Financial Report (CAFR) is prepared in the format required by the Governmental Accounting Standards Board (GASB). GASB issued GASB34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments issued in June As a direct result of changes in reporting requirements in the GASB 34 directive, some comparative data may not be available in this report. FINANCIAL HIGHLIGHTS The Florence Township School District continues to experience the same difficulties as most New Jersey school districts due to relatively flat state aid funding from the New Jersey Department of Education. The Florence Township School District benefited from a stable student population but structural increases in fixed costs, such as salaries and related benefits, significantly restricted resources available for improving or expanding instructional programs. Pursuant to the Education Department General Administrative Regulations (EDGAR), 34 CFR, Part (b) (7), the Florence Township School District reported four (4) special revenue grants that exceed fifty thousand dollars ($50,000) for the fiscal year The largest grant falls under the Individuals with Disabilities Education Act, Part B (IDEA-B) - Combined Basic and Preschool in the amounts of five hundred six thousand seventeen dollars ($506,017) for Basic and ten thousand dollars ($10,000) for Preschool. The combined IDEA-B total was five hundred sixteen thousand seventeen dollars ($516,017). The IDEA-B Basic funds were dedicated, in a large percentage of the total, to the payment of special education out-of-district placement tuition for ten (10) month and extended year programs. The Preschool monies funded a percentage of the costs for the Florence Township School District's preschool disabled program which was, in large measure, in the form of a salary off-set for the preschool disabled teacher. Two (2) other relatively large special revenue funding sources for the fiscal year were both part of the No Child Left Behind (NCLB) - Consolidated Formula Sub-grant. Title 1A funding in the amount of two hundred eighty-two thousand seven hundred fifty-five dollars ($282,755) was utilized, predominately, for staff compensation for an after-school enhancement program called the STAR program and purchased professional and technical services. The Title 2A - Part A federal entitlement was dedicated to the funding of a classroom teacher salary and related costs. The amount of the Title 2A grant was sixty-five thousand fifty-nine dollars ($65,059). The remaining large special revenue funding source for the fiscal year was from the NJ Nonpublic C192/193 auxiliary and handicapped services totaling fifty-two thousand eight hundred fifteen dollars ($52,815). As reported on the Application for State School Aid (ASSA), enrollment decreased from one thousand six hundred twenty seven students (1,627) as of October 15, 2014, to one thousand five hundred ninety-five students (1,595) as of October 15, This represents a decrease of thirty-two (32) students. The below summary chart shows ASSA reported enrollments for the last ten (10) years: 10/15/06 10/15/07 10/15/08 10/15/09 10/15/10 10/15/11 10/15/12 10/15/13 10/15/14 10/15/

26 OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three (3) parts - management's discussion and analysis; the basic financial statements; and required supplementary information. The basic financial statements include two (2) kinds of statements that present different views of the Florence Township School District's financial condition. The first two (2) statements are district-wide financial statements that provide both short term and long term information about the Florence Township School District's overall financial status. The remaining statements are fund financial statements that focus on individual parts of the Florence Township School District. They report the Florence Township School District's operations in more detail than the district-wide statements. For example, the Florence Township School District has two enterprise funds - the food service program and a fee-based, extended day (before and after school) program. These funds are detailed in the fund financial statements, but are combined into the overall Florence Township School District financial statements. Governmental funds statements detail how basic services like regular and special education instruction and other overall operating expenses were financed for the budget/school year. The governmental funds also provide an analysis of fund balance remaining for future spending or to be used in the form of tax relief. Proprietary funds statements offer short-term and long-term financial information about the activities that the Florence Township School District operates in a business-like manner. Fiduciary funds statements provide information about the financial relationships in which the Florence Township School District acts solely as a trustee or agent for the benefit of others. In the Florence Township School District, these include funds held for unemployment insurance, scholarships, student activities, and payroll agency. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The financial statements are followed by a section of required supplementary information that further explains and supports the financial statements with a comparison of the Florence Township School District's budget for the year. The chart below shows how the various parts of this report are arranged and related to one another. ORGANIZATION OF FLORENCE TOWNSHIP SCHOOL DISTRICT'S ANNUAL FINANCIAL REPORT Management's Discussion And Analysis DistrictBwide Financial Statements Summary Basic Financial Statements Fund Financial Statements Required Supplementary Information Notes to the Financial Statements Detail MAJOR FEATURES OF DISTRICT-WIDE AND FUND FINANCIAL STATEMENTS District-wide Statements Governmental Funds Proprietary Funds Fiduciary Funds Scope Entire district except fiduciary funds The activities of the district that are not proprietary or fiduciary such as special revenue and building maintenance Activities the district operates similar to private businesses - food service and extended day programs. Instances in which the district administers resources on behalf of someone else such as scholarship programs and student activities monies Required financial statements Statement of net assets Statement of activities Balance sheet Statement of revenues, expenditures and changes in fund balances Statement of net assets Statement of revenues, expenses, and changes in fund net assets Statement of cash flows Statement of fiduciary net assets Statement of changes in fiduciary net assets 16

27 Accounting basis and measurement focus Accrual accounting and economic resources focus Modified accrual accounting and current financial resources focus Accrual accounting and economic resources focus Accrual accounting and economic resources focus Type of asset/liability information All assets and liabilities, both financial and capital, short-term and long term Generally assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets or longbterm liabilities included All assets and liabilities, both financial and capital, and short-term and long-term All assets and liabilities, both short-term and longbterm Type of inflow/outflow information All revenues and expenses during the year regardless of when cash is received or paid Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and the related liability is due and payable All revenues and expenses during the year, regardless of when cash is received or paid All revenues and expenses during the year, regardless of when cash is received or paid DISTRICT-WIDE STATEMENTS The district-wide statements report information about the Florence Township School District, as a whole, using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the Florence Township School District's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash was received or expended. The district-wide statements report contains an analysis of the Florence Township School District's net position and how they have changed. Net position - the difference between assets and liabilities - is one way to measure the Florence Township School District's financial position. The increase or decrease in the Florence Township School District's net assets from one budget/school year to the next budget/school year is only one (1) indicator of whether its financial position is improving or deteriorating. To assess the overall health of the Florence Township School District, you need to consider other non-financial factors. These factors are financial elements such as changes in the Florence Township School District's property tax base and the condition of school buildings and other facilities. In the district-wide financial statements, the Florence Township School District's activities are divided into two (2) categories: Governmental Activities: Business-type Activities: Most of Florence Township School District's basic services are included here. Examples of such services are regular and special education instruction, student transportation and general/school administration. Local purpose property taxes and state aid funding finance most of these governmental activities. Local purpose property tax funding is the largest percentage of the revenue base. The Florence Township School District's food service program and a feebased, extended day (before and after school) program are included under the business-type activities category. 17

28 The fund financial statements provide more detailed information about the Florence Township School District's funds, focusing on its most significant or "major" funds and not the Florence Township School District as a whole. Funds are accounting devices the Florence Township School District uses to account for specific sources of funding and spending by particular programs. The Florence Township School District's funds are those recognized in Generally Accepted Accounting Practices (GAAP) and are prescribed by New Jersey statutes and regulations. The Florence Township School District has three (3) types of funds recognized by Generally Accepted Accounting Practices (GAAP). These funds are: Governmental Funds: Florence Township School District's basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can be readily converted to cash flow and (2) the balances left at the end of the year available for future spending. Consequently, the governmental fund statements provide a detailed short-term view that assists in determining whether there are more or less financial resources that can be spent in the immediate future to finance the Florence Township School District's instructional and support programs. Since this information does not encompass the additional long-term focus of the district-wide statements, additional information is provided on the governmental funds statements that explains the relationship (or differences) between them. Proprietary Funds: Fiduciary Funds: Services for which the Florence Township School District charges a fee are reported in proprietary funds. In Florence Township School District's case, these include an internal service fund and an enterprise fund. This selection of funds include the unemployment insurance, scholarship, student activity, and payroll agency funds - funds in which the Florence Township School District is the trustee, or fiduciary, for assets generated by and belonging to others. The Florence Township School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets were generated. These activities are excluded from the district wide financial statements because the Florence Township School District cannot use their assets to finance its operations. 18

29 FINANCIAL ANALYSIS OF THE FLORENCE TOWNSHIP SCHOOL DISTRICT AS A WHOLE Net Position: The Florence Township School District's combined net position totaled four million seven thousand five hundred thirty-eight dollars ($4,007,538) on June 30, TABLE A-1 shows the comparison of the Florence Township School District's net position. TABLE A-1 Florence Township School District Net Position Governmental Business-Type Total Total Activities Activities School District % Change Current & Other Assets 1,346,141 1,291, , ,223 1,542,162 1,515,822-2% Capital Assets - Net 30,834,094 35,884,354 81, ,184 30,915,982 36,039,538 17% Deferred Outflows 2,502,345 2,946, ,502,345 2,946,773 18% Total Assets & Deferred Outflows 34,682,580 40,122, , ,407 34,960,489 40,502,133 16% Long-Term Debt Outstanding 35,979,860 35,693, ,979,860 35,693,928-1% Other Liabilities 792, ,371 58,145 72, , ,220-51% Deferred Inflows 721, , , ,447-47% Total Liabilities & Deferred Inflows 37,494,362 36,421,746 58,145 72,849 37,552,507 36,494,595-3% Net Investment in Capital Assets 14,035,431 13,846,277 81, ,184 14,117,319 14,001,461-1% Restricted 1,030,393 1,352, ,030,393 1,352,626 31% Unrestricted (11,877,606) (11,503,211) 137, ,374 (11,739,730) (11,351,837) -3% Total Net Position 3,188,218 3,695, , ,558 3,407,982 4,002,250 17% Note: Totals may not add due to rounding Net Assets Changes: Local purpose property taxes of eighteen million three hundred thirty-three thousand six hundred twenty-four dollars ($18,333,624) accounted for the highest percentage of revenues in the Florence Township School District's budget statement. The second largest funding source for the Florence Township School District was categorical state aid. The aid categories funded for the budget/school year were equalization aid, categorical special education aid and categorical security aid. TABLE A-2 shows the changes in net position for both revenues and expenses as well as total dollar and percentage changes. 19

30 TABLE A-2 Florence Township School District Change in Net Position Governmental Business-Type Total Total Activities Activities School District % Change Revenues: Program Revenues Charges for Services , , , ,029 3% Federal & State 5,598,286 8,053, , ,659 5,943,443 8,395,189 41% General Revenues Local Purpose Property Taxes 18,088,336 18,333, ,088,336 18,333,624 1% Federal or State Aid 9,855,832 9,581, ,855,832 9,581,584-3% Tuition Other 223, , , ,101 28% Total Revenues 33,765,454 36,253, , ,688 34,699,157 37,200,527 7% Expenses: Instruction Related 12,025,643 12,675, ,025,643 12,675,754 5% Tuition 1,567,872 1,847, ,567,872 1,847,144 18% Student & Inst. Related Serv. 3,149,700 3,190, ,149,700 3,190,840 1% Administrative Services 2,578,325 2,662, ,578,325 2,662,029 3% Maintenance 3,245,387 2,950, ,245,387 2,950,827-9% Transportation 1,811,605 1,746, ,811,605 1,746,825-4% Benefits 4,496,614 7,275, ,496,614 7,275,693 62% Other 3,745,805 3,862, , ,666 4,724,736 4,818,099 2% Total Expenses 32,620,951 36,211, , ,666 33,599,882 37,167,211 11% Incr (Decr) Net Position 1,144,503 42,294 (45,228) (8,978) 1,099,275 33,316-97% Note: Totals may not add due to rounding Business-Type Activities: The Florence Township School District retains a food service management company to operate the food service program. The food service operation has been a contracted service for more than ten (10) years. A large and expanding business-type activity is an extended day program. The fee-based program is run by Florence Township School District appointed personnel. There are three (3) major parts to the program. The largest is the after school hours extended day program which is run at the Riverfront School for 3 rd grade through 8 th grade and the Roebling Elementary School No. 5 grades kindergarten through 3 rd grade. The second is a full-day, extended year program that is conducted during the summer recess. The site for the extended year program is the Riverfront School. Finally, the Florence Township School District provides staff supervision, on a fee-basis, for before school arrivals at Roebling Elementary School No. 5 and the Riverfront School. 20

31 TABLE A-3 provides a summary of the cost of all governmental activities for the budget/school year. TABLE A-3 Florence Township School District Net Cost of Governmental Activities Total Cost Total Net Cost Total Of Services % Change of Services % Change Instruction Related 12,025,643 12,675,754 5% 11,237,653 11,842,035 5% Tuition 1,567,872 1,847,144 18% 1,567,872 1,657,885 6% Student Inst. Related Services 3,149,700 3,190,840 1% 2,836,018 3,190,840 13% Administrative Services 2,578,325 2,662,029 3% 2,578,325 2,662,029 3% Maintenance 3,245,387 2,950,827-9% 3,245,387 2,950,827-9% Transportation 1,811,605 1,746,825-4% 1,811,605 1,746,825-4% Benefits 4,496,614 7,275,693 62% - 245,141 0% Other 3,745,805 3,862,433 3% 3,745,805 3,862,433 3% Total 32,620,951 36,211,545 11% 27,022,665 28,158,015 4% Note: Totals may not add due to rounding FINANCIAL ANALYSIS OF THE FLORENCE TOWNSHIP SCHOOL DISTRICTS FUNDS All of the Florence Township School District's governmental funds showed more revenues than expenditures at June 30, Unexpended special revenue funds, if any, will be refunded to the appropriate funding authority which is primarily the New Jersey Department of Education. The Florence Township School District ended the year with one million two hundred twenty-seven thousand three hundred sixty-seven dollars ($1,227,367) in total fund balances. A portion of the unreserved fund balance will be used for tax relief in its budget/school year with a portion remaining to balance cash flow, as well as, for unforeseen emergencies that may arise. GENERAL FUND BUDGETARY HIGHLIGHTS During the budget year, the Florence Township School District made some budget amendments and/or transfers in order to ensure that statutory requirements not to over-expend advertised line items were met. All transfers made were approved by the Florence Township Board of Education at the next regular monthly meeting. CAPITAL ASSET AND DEBT ADMINISTRATION TABLE A-4 provides information regarding the Florence Township School District's capital assets. 21

32 TABLE A-4 Florence Township School District Net of Depreciation Capital Assets Governmental Business-Type Total Total Activities Activities School District % Change Land 918, , , ,785 0% Construction in Progress % Site Improvements 1,027, , ,027, ,008-11% Buildings 33,734,070 32,575, ,734,070 32,575,646-3% Equipment & Furniture 1,461,830 1,473, , ,184 1,639,490 1,629,097-1% Total 37,142,074 35,884, , ,184 37,319,734 36,039,536-3% Note: Totals may not add due to rounding. LONG TERM DEBT At year end the Florence Township School District had twenty-two million two hundred fifty thousand dollars ($22,250,000) in general obligation and other long-term debt outstanding. This represents a decrease of 7 percent (7%) from the prior year. More detailed information about the Florence Township School District long-term liabilities is presented in Note 8 to the financial statements. In the budget/school year, the Florence Township School District issued two hundred fifty-six thousand one hundred twenty ($256,120) and retired one hundred nine thousand nine hundred seventy-eight dollars ($109,978) in debt for New Jersey Commissioner of Education approved lease purchase agreements and one million seven hundred forty dollars ($1,740,000) in debt on general obligation bonds. TABLE A-5 Florence Township School District Outstanding Long-Term Debt Total Total School District % Change General Obligation Bonds 23,990,000 22,250,000-7% Commissioner-Approved Lease Purchase 111, , % Compensated Absences Restated 3,295,668 3,318,233 1% Other 8,582,251 9,867,612 15% Total 35,979,860 35,693,928-1% Note: Totals may not add due to rounding FACTORS BEARING ON FLORENCE TOWNSHIP SCHOOL DISTRICT'S FUTURE At the time these financial statements were prepared and audited, the Florence Township School District was aware of no existing circumstances that could significantly affect its financial health in the future. The contractual agreements with all recognized bargaining units in the Florence Township School District were renegotiated and will expire on June 30,

33 Florence Township Memorial High School Florence Township Intermediate School Riverfront School Roebling Elementary School No. 5 23

34 CONTACTING THE FLORENCE TOWNSHIP SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, vendors, and investors and creditors with a general overview of the Florence Township School District's finances and to demonstrate the Florence Township School District's accountability for the funding it receives. If you have any questions about this Report or need additional financial information, please contact the School Business Administrator, Florence Township School District, 201 Cedar Street, Florence, New Jersey , call (609) or mlivengood@florence.k12.nj.us. Melissa Livengood Business Administrator/Secretary to the Board 24

35 BASIC FINANCIAL STATEMENTS 25

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37 A. Government-Wide Financial Statements 27

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39 FLORENCE TOWNSHIP SCHOOL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2016 EXHIBIT A-1 BUSINESS - GOVERNMENTAL TYPE ACTIVITIES ACTIVITIES TOTAL Cash & Cash Equivalents $ 938,554 $ 160,916 $ 1,099,470 Receivables, Net 346,609 50, ,285 Inventory - 12,631 12,631 Restricted Cash & Cash Equivalents 1,150-1,150 Capital Assets, Non-Depreciable (Note 6) 918, ,785 Capital Assets, Depreciable (Note 6) 34,965, ,184 35,120,751 Total Assets 37,170, ,407 37,550,072 Deferred Outflows Related to Pensions 1,189,182-1,189,182 Deferred Charge on Refunding of Debt 1,327,875-1,327,875 Unamortized Utility Assessment 429, ,716 Total Deferred Outflow of Resources 2,946,773-2,946,773 Total Assets and Deferred Outflow of Resources 40,117, ,407 40,496,845 LIABILITIES ASSETS DEFERRED OUTFLOW OF RESOURCES Cash Deficit - 22,256 22,256 Unearned Revenues 11,762 50,593 62,355 Accrued Interest Payable 281, ,427 Payable to Federal Government 22,197-22,197 Payable to State Government 29,985-29,985 Noncurrent Liabilities (Note 7): Due Within One Year 2,356,954-2,356,954 Due Beyond One Year 33,336,974-33,336,974 Total Liabilities 36,039,299 72,849 36,112,148 DEFERRED INFLOW OF RESOURCES Deferred Inflows Related to Pensions 382, ,447 Total Deferred Inflow of Resources 382, ,447 Total Liabilities and Deferred Outflow of Resources 36,421,746 72,849 36,494,595 NET POSITION Net Investment in Capital Assets 13,846, ,184 14,001,461 Restricted For: Other Purposes 1,351,474-1,351,474 Capital Projects 1,150-1,150 Debt Service 2-2 Unrestricted (11,503,211) 151,374 (11,351,837) Total Net Position $ 3,695,692 $ 306,558 $ 4,002,250 The accompanying Notes to Financial Statements are an integral part of this statement. 29